Apx Table C. 9 Strengths and weaknesses of a cap and trade style incentive
Strengths
� Provides certainty about emission for all participants and caps total emissions
� Allows emissions to occur for the highest value output
� Facilitates compensation to those who reduce emissions
Challenges
� Needs an enforced cap
� Need a clear understanding of actions and sediment transfer outcomes
� Need many buyers and sellers to create a market
� Requires extensive information to allocate emission permits, design and enforce rules for trade and monitoring and enforcement( which is all costly to enact and administer)
C. 2.4
Rate rebate
Rate rebates are an incentive that can be applied by a local government but not directly by a regional NRM body. A local government can encourage positive NRM practices through offering an exemption from rates, differential rating or reduction in rates as a reward for adopting a voluntary conservation covenants or managing a sensitive area on a property. Rate rebates are probably best suited to areas where rates are high enough that a rebate would act as an incentive for change. However, offering a rebate can still be effective in areas where rates are low as this provides a good signal to landowners that conservation is an important land use. This is especially true if agricultural production attracts a rebate, as otherwise moving from agriculture to conservation will lead to an increase in rates.
Some challenges of rate rebates include the difficulty that might be incurred to establish the level of a rate rebate( if it is too low, the activity will not be encouraged; if it is too high the revenue loss may be higher than the outcome justifies). Some local governments in remote areas with low rate bases may also find it financially difficult to offer rate rebates. In this instance, the regional body might be able to financially support local governments offering rate rebates for certain activities that help achieve priority outcomes. If the rate rebate program were to continue indefinitely, it might be more difficult for a regional body without permanent funding to provide financial support. These bodies may be able to set a trust fund to guarantee funding for a longer period of time. In other circumstances, regional NRM bodies could let local governments know which management actions are a regional priority and encourage them to support these actions with rates rebates.
Apx Table C. 10 Strengths and weaknesses of rate rebate style incentives
Strengths
� Could engage landholders who have been difficult to engage with before
Challenges
� NQDT do not have the authority to conduct a rate rebate scheme directly
� Won’ t be an incentive of interest in areas of low Local Government rate base
� Linking land management to rate rebates and ensuring outcomes over time
Landholders driving change: Exploring new incentives | 85